ENG-2004 — Page 81

The Economy 51

industrial processing to a wider spectrum of business ventures, such as hotels and tourist-related facilities, real estate and infrastructure development. Relative to other places in the Mainland, Hong Kong's economic links with Guangdong are the most intimate. At end-2003, the cumulative value of Hong Kong's realised direct investment in Guangdong was US$95 billion, accounting for 67 per cent of its total inward direct investment. According to a survey conducted by the Federation of Hong Kong Industries in December 2003, 11 million Chinese workers were employed either directly or indirectly in the Mainland by industrial ventures with Hong Kong interests, of which 10 million were in Guangdong. This is about 58 times the size of Hong Kong's own manufacturing workforce.

In the opposite direction, there has been likewise a sizeable flow of investment capital from the Mainland to Hong Kong over the past years. By end-2003, the Mainland had invested a total of US$99 billion in Hong Kong, making it the largest source of external direct investment here. According to the Ministry of Commerce, over 2 000 Mainland non-financial enterprises currently operate in Hong Kong, with total investment amounting to US$4.7 billion. In September 2004, the Ministry of Commerce and the Hong Kong and Macao Affairs Office jointly promulgated measures to facilitate Mainland investment in Hong Kong and Macao. Approval authority for Mainland enterprises registered with provincial governments is delegated to the provincial level. Processing time for applications is shortened to 15 working days.

In tandem with the surge in cross-boundary business activities, financial links. between Hong Kong and the Mainland have strengthened substantially over the past years. Hong Kong's authorised institutions' external claims on and liabilities to entities in the Mainland were generally on the rise over the period. Comparing end-2004 with a year earlier, external liabilities of Hong Kong's authorised institutions to entities in the Mainland grew by 22 per cent to $400 billion, and their external claims on entities in the Mainland even faster by 45 per cent to $259 billion.

The Bank of China (Hong Kong) Limited is the second largest banking group in Hong Kong, after the HSBC Group. It is also one of the note-issuing banks in Hong Kong, besides the Hongkong Bank and the Standard Chartered Bank. The other three state-owned commercial banks, namely the China

China Construction Bank, the Agricultural Bank of China, and the Industrial and Commercial Bank of China, have all been granted banking licences to operate in Hong Kong since 1995. On the other hand, the HSBC Group, the Bank of East Asia and the Standard Chartered Bank are among the best-represented foreign banks in the Mainland.

Hong Kong serves as a major funding centre for the Mainland. Besides being a direct source of funds, it also provides a window through which foreign funds can be channelled efficiently into the Mainland for financing development projects there. While syndicated loans remain the most important means for Mainland-related enterprises to raise funds in Hong Kong, issuance of securities has become increasingly popular in recent years. In 2004, listing activities by Mainland enterprises continued to be a prominent feature in Hong Kong's stock market. By end-2004, a total of 304 Mainland enterprises had been listed on Hong Kong's stock market.